Dec. 31 (Bloomberg) -- Zambia’s kwacha weakened against the dollar before its rebasing tomorrow.
The currency of Africa’s biggest copper producer depreciated 0.4 percent to 5,206 per dollar at 8:01 a.m. in Lusaka, the capital.
The kwacha may retreat further at the start of the new year, Mwewa Kyamulanda, a currency trader with Investrust Bank Plc, said by mobile phone from Lusaka. The re-basing will take place on Jan. 1 and remove three zeros from the current exchange rate. The currency will probably average 5.19 to 5.21 a dollar in January, he said. Other African countries including Zimbabwe and Ghana have in the past rebased their respective currencies.
“There will be some short term depreciation from some players in the market that would prefer to convert their cash into dollars,” he said. “We actually traded a large volume of cash over the past few weeks,” when clients were changing their kwacha for dollars, said Kyamulunda.
Higher inflation rate in the 1990s and early 2000s resulted in the kwacha weakening from as much as 960 per dollar in 1994 to 5,650 a dollar in 2009.
Zambia will remove from circulation bank notes including 50,000 kwacha, 20,000 kwacha and 10,000 kwacha. It will reintroduce coins denominated in ngwee. One kwacha is worth 100 ngwee.
The kwacha was Africa’s strongest performer on Dec. 24 with a gain of 4 percent as the government was said to be supporting it. It was the weakest on Dec. 27, slumping 5.3 percent, as investors swapped kwacha for dollars.
The new currency code for kwacha will be ZMW.
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